Understanding Climate Change Impacts on Non-Agricultural Firms

The reference in the APA style Sussman, F. G., & Freed, J. R. (2008). Adapting to climate change: A business approach. Arlington, VA: The Pew Center on Global Climate Change. The main idea Sussman and Freed (2008) suggest three physical risks of climate change. The physical risks are core operations, the value chain and the broader supply and demand network. The supporting ideas and evidence Climate change leads to changes in patterns of rainfall, temperature and extreme events so that climate change could affect systems such as production systems and economic structures, that have been developed under relatively stable climate conditions. The evidence includes Entergy corporation, an electricity power plant in the USA, that experienced significant infrastructure damages because of Katrina hurricanes. The hurricane impacts forced the company to relocate its offices in New Orleans. The relevance This summary has some relevance to the second assignment. First of all, the writers idea about the physical risks of climate change can be used to explain how climate change can affect nonagricultural firms. Secondly, some evidence in this text can be attached to support claims that climate change or extreme events can affect the firm performance. Another relevance is the risk disk concept from the text can be explored further to describe climate change impacts from a small scale until a larger scale, that is, from core operations until the broader supply and demand network.

The summary There are many physical risks of climate change on business. The first type is risks to core operations. Climate change could affect main facilities such as factories and construction facilities. For instance, extreme floods could damage buildings and factory sites. Risks associated with the value chain are the second risk type. It means climate change could influence the quality and quantity of production inputs. Higher temperature, for example, could decrease rice biomass and nutrients that lead to low productivity and low quality. Thirdly, climate change tends to affect the broader supply and demand network. In this risk type, climate change could damage utilities, and infrastructure such as water supply, sewerage, road and electricity power plants. It is called the broader supply and demand network because disruption of these facilities has wide impacts that could disturb larger systems such as supply chains, and distribution networks. Based on the physical risk concepts, climate change could affect non-agricultural firms. Firstly, it can affect non-agricultural firms in the terms of core operations. Climate change may increase maintenance costs as it tends to raise machine breakdowns. For example, because of higher temperature, employees tends to use air conditioners more frequently than usual that could shorten the machines component lifetime. In the cases of the value chain risks, climate change also could

decrease product quality. Construction companies could not construct high quality of buildings as extreme rain may shorten building material reliability. Lastly, climate change could affect nonagricultural firms in the terms of the broader supply and demand network. If climate change damages railway facilities, firms could not fulfill customer demand on time because raw materials would not arrive at an appropriate time.

TOTAL WORDS: 277 (SUMMARY ONLY)

The references Intergovernmental Panel on Climate Change (IPCC). (2007). Climate change 2007 - the physical science basis: Working group I contribution to the fourth assessment report of the IPCC. Cambridge, United Kingdom: Cambridge University Press.